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TMI Blog1992 (5) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... f show-cause notices issued under Rule 9(2) read with section 11A as per details of show-cause notices gives below :- (a) SCN dated 9-12-1988 - 1-5-1988 to 31-10-1988 issued by the Assistant Collector, answerable to Collector. (b) SCN dated 28-4-1989 - 1-11-1988 to 31-12-1988 issued by the Superintendent, answerable to the Assistant Collector. (c) SCN dated 27-6-1989 - 1-1-1989 to 30-4-1989 issued by the Superintendent, answerable to the Assistant Collector. (d) SCN dated 22-9-1989 - 1-1-1989 to 31-8-1989 issued by the Superintendent, answerable to the Assistant Collector. 2. Appearing for the appellants, ld. Counsel, Shri Ravindran, submitted that in this case, there was no ground for the Department to allege suppression and invoke longer period for demanding the duty. It was submitted that the appellants, after the establishments of their factory, intimated their intention to manufacture soya milk to the Central Excise authorities in their letter dated 27-1-1987 and on commencement of production of soya milk, they had submitted another letter dated 18-3-1987 along with the declaration of the manufacturing process and ingredients used in the manufacture of soya milk. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Collector has not considered the various grounds taken by the appellants in reply to the show-cause notice. There is no finding as to why the commercial and technical evidence, produced by the appellants in the form of affidavits and certificates by two well-known authorities on the subject, had not been found acceptable. The ld. Counsel referred to the technical opinion of Prof. J.S. Pai of the University of Bombay, who has opined that soya milk, normally, contains added sugar, oil, flavouring, etc. and also the opinion of Shri H.S. Gurudas, Executive Director, Protein Foods Nutrition Development Association of India, who is a Food Technologist with vast experience. He has opined that in the absence of national standards, international norms should be referred, according to which the product of the appellants is soya milk. The affidavits from the consumers of the product were also referred to say that they use it as soya milk for its nutritive value. The ld. Counsel urged that the affidavits of the dealers and the distributors also indicate that the product is bought and sold as soya milk and the trade understanding should have been given due consideration as has been held by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to challenge the vires of the Rules, the ld. Counsel, fairly, agreed that it was so and that he could not, in law, press this point before a statutory Tribunal. The ld. Counsel, further, urged that the evidence clearly shows that there was no contumacious conduct by the appellants in this case and, therefore, the penalty on them was unwarranted. 4. Smt. J.M.S. Sundaram, ld. Sr. D.R., appearing for the Department contended that as regards the jurisdiction to issue a show cause-notice, out of four notices, three had been issued within six months by the Superintendent and one by the Assistant Collector beyond six months. These notices invoked Rule 9(2) read with Section 11A of Central Excises and Salt Act, 1944. Under Rule 9(2), the competent officer to issue the notice, is the proper officer. The definition of proper officer, under Rule 9(2) of Central Excise Rules, is one in whose jurisdiction, the factory is located. Therefore, the show-cause notice issued is valid. It was, further, urged that the reference to Section 11A in Rule 9(2) is only for prescribing a time limit which did not exist in the Rule as it was earlier. It specifies only the time limit with reference to Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l distinction between the two products, soya milk and soya milk beverages. The fact that the appellants do not market soya milk, does not make any difference so long as it is marketable. That this is so, is indicated by the fact that soya milk has applications in pharmaceutical and food processing industry. The ld. Sr. D.R. referred to the project report which shows that soya milk is subject to several processes at the end of which soya milk beverage emerges. The ld. Sr. D.R. also pointed out that in 1992, the Notification No. 8/92, dated 2-1-1992, issued, extended the exemption to sweetened and flavoured soya milk. This shows that prior to that, such products did not enjoy exemption. It was also contended that the way a product, advertised by a manufacturer, is not material for its classification as has been held in the case of Leukoplast (India) (Pvt.) Ltd. and Others v. Union of India and Others reported in 1985 (20) E.L.T. 70 (Bom.). The affidavits, produced in support by me appellants, are in the nature of personal opinion. No Indian Standard specification has been brought out. 5. The submissions made by both the parties, herein, have been carefully considered. The classif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, grinding it and after fibre separating therefrom. There is a clear indication in the project report that the soya milk base is subjected to heating and vacuum treatment for destructing of certain anti-nutritional factors as well as deodorisation. The report, further, says on blending with other ingredients such as oil, sugar, flavour, colour and stabiliser, the soya base yields the flavoured soya milk beverages. The product is finally processed by an ultra high temperature treatment and especially packaged to ensure total sterility and long shelf-life at room temperature. Therefore, it is clearly emerging that from the soya milk base, on blending with flavour and standing agents, soya milk beverages emerges. There is also indication in the report that the soya milk is used in other industries. It is stated, therein, apart from the direct consumer use as a beverage, soya milk can be used by the food and pharmaceutical industries as a high protein ingredient or as a replacement for milk. Soya milk, both in the liquid form and as a spray dried powder, can serve as a valuable ingredient to the processed foods industry in the manufacture of bakery products, confectionary, sweetmeats ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 1-3-1989 as amended. [Calcutta-II Collectorate Trade Notice No. 248/(CH-22) 3/CE/CAL-II/90 dated 14-12-1990; Parallel Chandigarh No. 140-CE/90, dated 22-12-1990; Bombay-1 No. 139/90, dated 18-12-1990.] It is well settled that the meaning ascribed by the authority, issuing the Notification is a good guide contemporaneous exposition of the position of law, as has been held by the Supreme Court in the case of Collector of Central Excise, Guntur v. Andhra Sugar Ltd. reported in 1988 (38) E.L.T. 564 (S.C.). In that case also, the Supreme Court relied upon the Government of India decision in interpreting a notification relating to product intermediate drugs. In the result, therefore, the contention of the appellants that the product manufactured by them, is eligible for exemption as soya milk under Notification Nos. 286/86 and 20/89 is not well founded and in this view of the matter, the findings of the Collector, in this regard, about the eligibility of the product to the exemption, have to be upheld and it is ordered, accordingly. As regards the question whether the longer period can be invoked, there appears considerable force in the appellants contention because a perusal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant date in clause (ii) of sub-section (3) of Section 11A into Rule 9(2) merely because Rule 9(2) imports the period of limitation specified in Section 11A? Similarly, Rule 52-A provides that no excisable goods shall be delivered from a factory except under a gate pass signed by the owner of the factory and countersigned by the proper officer . Sub-Rule (5) provides for penalty and confiscation of goods, in cases of violation of the requirement. No period of limitation is prescribed in sub-rule (5) of Rule 52A. It does not even prescribe who is the proper authority to levy the penalty and/or to confiscate the goods thereunder. Rule 210 provides generally that a breach of these rules shall, where no other penalty is provided herein or in the Act, be punishable with a penalty which may extend to one thousand rupees and with confiscation of the goods in respect of which the offence is committed . This Rule does not prescribe any period of limitation, nor does it specify the authority competent to levy the penalty and/or to confiscate the goods. Rule 226 prescribes the manner in which books shall be maintained by a manufacturer. At the same time, it provides that any person, who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be open to him, if he is aggrieved by the final orders that are passed, to adopt such remedies as are open to him under law." 6. Reliance has been placed on the Alcobex Metals decision of the N.R.B. for the proposition that the show-cause notice has to be issued by the Collector even if it is within six months, if it contains charges of suppression of fact. However, this decision of the N.R.B. was relating to interpretation of Section 11A whereas in the present case, we are concerned with the show-cause notice issued invoking Rule 9(2) and not Section 11A. 7. The High Court had held (supra) that various rules for confiscation of goods and levy of penalty invoked in the show-cause notices referred to therein under Rules which are not governed by any period of limitation. High Court had also held that the provisions of Section 11A, as a whole, cannot be imported into Rule 9(2). Therefore, the submissions made in this regard, do not have any force. As regards the quantum of penalty, since it has been found that the circumstances of the case do not indicate deliberate suppression of facts by the appellants to evade payment of duty, there is a justification for affording relief i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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